Aeon Credit Service (m) Bhd. · MYX:AEONCR
Aeon Credit Service (m) Bhd — Q2 FYE24 Earnings Presentation
36 slides from Aeon Credit Service (m) Bhd's earnings presentation, Sep 26, 2023
Slide 1: Q2 FYE24 Financial Results
Q2 FYE24 Financial Results 26 September 2023
Slide 2: Table of Contents
Table of Contents 03 FINANCIAL OVERVIEW 14 KEY STRATEGIES & MOVING FORWARD 25 CORPORATE EXCERCISE 29 APPENDIX
Slide 3: Financial Review
SEON FINANCIAL REVIEW “A a
Slide 4: Q2 FYE24 Key Highlights (QoQ)
Q2 FYE24 Key Highlights (QoQ) Revenue PBT Gross Receivables Dividend RM471.7 mil RM159.2 mil RM11.6 bil 28.5 sen per share +4.2% QoQ +20.7% QoQ +3.1% QoQ 33.1% payout ratio PROFITABILITY ASSET GROWTH AND QUALITY DIVIDEND • Revenue grew by 4.2% to RM471.7 mil • Transaction and Financing Volume declin
Slide 5: Financial Performance
Financial Performance Q2FYE24 PAT +58.9% YoY; Gross financing receivables +11.4% Q2FYE23 Q2FYE24 Q2 QoQ Q2 YoY 1H FYE23 1H FYE24 1H YoY Total Income RM447.0M RM521.2M 3.8% 16.6% RM896.3M RM1,023.1M 14.2% Operating Expenses RM118.1M RM154.6M 16.45% 30.9% RM237.1M RM287.3M 21.2% Operating Profit befor
Slide 6: Total Transaction & Financing Volume
Total Transaction & Financing Volume Easy Payment and Personal Financing volume increases YoY driven by double digit growth in loan application Total Transaction & Financing Volume (RM mil) Transaction & Volume by types 857 47.6% 45.0% 805 482 485 768 493 500 435 Q2 Q2 FYE23 FYE24 409 27.1% 25.4% 27
Slide 7: Total Gross Financing Receivables
Total Gross Financing Receivables Growth trajectory on track underpinned by Personal Financing volume growth Gross Receivable by types Gross Financing Receivables (RM mil) 67.0% 64.9% 7,373 7,510 6,960 3,317 720 739 3,126 Q2 Q2 675 2,746 FYE24 FYE23 26.5% 28.7% 6.5% 6.4% • Overall loan growth moment
Slide 8: Receivables Collection
Receivables Collection Maintain balanced approach of sales expansion and prudent credit management Current Collection Ratio (%) D1 & D2 Collection Ratio (%) Asset quality improved QoQ: • Launching of risk-based collection strategy in Mar’23, focusing on high-risk customers to improve collection stra
Slide 9: Non-Performing Loan (NPL)
Non-Performing Loan (NPL) Sequential improvements from risk-based approach collection strategy to optimise collection performance NPL Trend 2.91 3.13 2.98 2.24 • Marginal decrease in D3+ Balance contributed by improvements in Vehicle Financing and Personal Financing • Adopted risk-based collection s
Slide 10: Net Credit Cost (NCC)
Net Credit Cost (NCC) Continuous prudent approach on provisioning NCC Trend 5.53% 4.88% 3.70% Lower annualised NCC: 2.35% 3.87% 3.23% • Lower impairment loss QoQ 1.75% contributed by improvement 0.80% in collection activities and productivity in line with the implementation of risk-based collection
Slide 11: Impairment Loss (IL) Analysis
Impairment Loss (IL) Analysis Loan Loss Coverage Ratio remains at healthy levels Expected Credit Loss (ECL) provision 343% attributed by: 276% 227% 219% • Reversal of delinquent account movement of RM51 mil and general 10 provision of RM17 mil; offset by new sales provision of RM28 mil 18 121 162 •
Slide 12: Cost-to-Income Ratio (CIR)
Cost-to-Income Ratio (CIR) CIR expansion in line with sales and revenue growth Q2 Q2 1H 1H RM mil YoY YoY FYE23 FYE24 FYE23 FYE24 Total Operating Income 447.0 521.2 16.6% 896.3 1,023.1 14.2% Personnel Expenses 52.5 63.3 20.5% 95.7 116.2 21.5% Advertisement & Promotion 5.8 8.6 47.5% 14.2 18.3 29.0% O
Slide 13: Dividend
Dividend Declared interim dividend of 28.50 sen for FYE2024, translating into dividend payout ratio of 33.1% Historical Dividend Data 31.9% 33.9% 33.1% 35.0% 31.5% 500.0 30.3% 30.0% 400.0 25.0% 300.0 20.0% 200.0 100.0 15.0% 91.9 292.0 74.6 234.0 123.8 365.4 126.4 417.7 78.8 219.6 - 10.0% FYE20 FYE21
Slide 14: Key Strategies and Moving Forward
KEY STRATEGIES AND MOVING FORWARD
Slide 15: FYE2024 Indicators
FYE2024 Indicators Continual delivery of sustainable returns to shareholders Indicators Actual Remark FYE24 1H FYE24 • Driven by high application count coupled with higher approval ratio, Loan Growth ±10% 11.4% attributed to strategic marketing campaigns and higher pre-assessment application Cost-to
Slide 16: Our Mid Term Aspirations
Our Mid Term Aspirations 4 Key Pillars of focuses to drive financial inclusion and sustainable growth Support our customers Innovative Retail Company Best Employer of Choice ESG leading Company through their life cycle - Significant wallet user base - High Employee Satisfaction - Maintain high ESG s
Slide 17: Receivables Growth: Digital Onboarding
Receivables Growth 1. Driving sales and member growth via digital onboarding from application to disbursement within 1 day End-to-End Digital Onboarding ➢ Easy payment digital onboarding with instant conditional approval live in Sep’22 and Personal Financing live in May’23 Contact E-Mandate Verifica
Slide 18: Receivables Growth: Credit Card Business
Receivables Growth 2. Enrichment of Credit Card Business via rebranding and card features revision Credit Card Features Revamp ➢ Launch new card features in Oct 23 to acquire AEON Shoppers through attractive rewards and benefits, making AEON credit card a “Must Have Card” in AEON Store ➢ Set up 10 d
Slide 19: Receivables Growth: AI Scoring Model
Receivables Growth 3. Redefined assessment process to improve accuracy and productivity Implement AI Scoring Model ➢ To launch Loan Origination System (LOS) 3.0 in Oct 23 and focus on completion of straight through process ➢ YTD automatic judgment process stood at 34% Implement AI-based LOS 3.0 enha
Slide 20: Receivables Growth: New Collection System
Receivables Growth 4. Enhanced efficiency and productivity through New Collection System Risk-Based Collection Approach ➢ Implemented collection risk-based scorecard model by categorising customers according to their scores and risk profiles for Easy Payment and Personal Financing ➢ Extension of rep
Slide 21: Enhance Customer Experience
Enhance Customer Experience One stop financing app that connects all AEON points accounts to AEON Group Membership Platform AEON Group Membership Upgraded AEON Wallet usability and improved user experience Launched New Oct’22 wallet interface E-donation designed with AEON Jan’23 points EPPF Mar’23 F
Slide 22: Employee Development
Employee Development Committed to Employee Enrichment AEON Group Employee Development Membership Invested in Microsoft 365 to modernize working platform Launch of HR mobile app Invest in cloud shifting and migration for changing business needs High employee satisfaction (ES) Company Employee Develop
Slide 23: Sustainability Focus
Sustainability Focus Embed Sustainability into AEON Credit business Sustainability Statement Shaping our future in financial services through sound, innovative and sustainable ESG practices and initiatives ESG Achievement to- Environmental Economy Social Governance date:- Green and Social Education
Slide 24: Sustainability Activities – Q2 FYE24
Sustainability Activities – Q2 FYE24 AEON Credit Annual Nationwide Coastal Clean-up Programme Continue to preserve the coastline biodiversity as part of ACSM 3-year Sustainability Roadmap Tanjung Balau, Pantai ODEC UMS, Pantai Bersih, Johor Sabah Penang 4.0 tonnes Waste collected Pantai Bagan Lalang
Slide 25: Corporate Exercise
CORPORATE EXERCISE
Slide 26: Proposed Joint Venture Structure and Capital Injection
Proposed Joint Venture Structure and Capital Injection To undertake the business of a Digital Islamic Bank Shareholding Structure Capital Injection Total estimated capital injection of RM550 million for up to ACSM AFS ACSM AFS 5 years from commencement of the Digital Bank ❖ Capital injection via sub
Slide 27: Key Rationale for Expanding Into The Banking Business
Key Rational For Expanding Into The Banking Business To create AEON Synergies, leverage on combined expertise to expand its banking business to AEON Living Zone Synergies COMPETITIVE We combine our financial expertise to serve underserved markets, SYNERGIES FUNDING ADVANTAGE leveraging the AEON reta
Slide 28: Proposed Bonus Issue
Proposed Bonus Issue 1 Bonus Share for every 1 existing AEON Credit Share Proposed Bonus Issue Rationale 1 + 1 2 ❖ To improve the marketability Existing AEON Proposed AEON Credit Shares (Upon and trading liquidity of the Credit Share Bonus Share Company’s shares Completion) ❖ To reward our sharehold
Slide 29: Appendix
SEON ‘CREDIT SERVICE APPENDIX a
Slide 30: Performance Highlights
Performance Highlights Q2 Q1 Q2 1H 1H (RM mil) QoQ YoY YoY FYE23 FYE24 FYE24 FYE23 FYE24 Total Transaction & Financing 1,612 1,832 1,790 -2.3% 11.0% 3,099 3,622 16.9% Volume Payment Business 435 482 485 0.5% 11.6% 889 968 8.9% Easy Payment Financing 768 857 805 -6.0% 4.8% 1,506 1,661 10,4% Personal
Slide 31: Financial Summary
Financial Summary Q2 Q1 Q2 (RM mil) QoQ YoY FYE23 FYE24 FYE24 Credit Card 675.1 719.7 738.8 2.7% 9.4% Personal Financing 2,745.9 3,126.5 3,316.7 6.1% 20.8% Easy Payment Financing 6,960.0 7,372.8 7,510.1 1.9% 7.9% Total Financing Receivables 10,381.0 11,219.0 11,565.6 3.1% 11.4% Impairment Loss -833.
Slide 32: Operating Income
Operating Income Q2 Q1 Q2 1H 1H (RM mil) QoQ YoY YoY FYE23 FYE24 FYE24 FYE23 FYE24 Payment Business 39.5 42.8 44.3 3.3% 12.1% 79.1 87.1 10.2% Personal Financing 106.9 128.8 140.1 8.8% 31.1% 209.7 268.9 28.2% Easy Payment Financing 250.6 278.1 284.1 2.2% 13.4% 496.5 562.2 13.2% Brokerage Fee* 2.2 3.0
Slide 33: Total Expenses
Total Expenses Q2 Q1 Q2 1H 1H (RM mil) QoQ YoY YoY FYE23 FYE24 FYE24 FYE23 FYE24 Impairment Loss on Receivables 150.0 152.5 120.6 -20.9% -19.6% 187.2 273.1 45.9% Personnel Expenses 52.5 53.0 63.3 19.5% 20.5% 95.7 116.2 21.5% Advertisement & Promotion (A&P) 5.8 9.7 8.6 -11.2% 47.5% 14.2 18.3 29.0% Ot
Slide 34: Financial Indicators
Financial Indicators Q2 1H FYE21 FYE22 FYE23 FYE24 FYE24 PBT (RM mil) 324.9 526.8 547.0 159.2 291.1 PAT (RM mil) 234.0 365.4 417.7 120.2 219.5 Weighted average no. of ordinary shares (mil) 255.3 255.3 255.3 255.3 255.3 Basic EPS (RM)* 0.88 1.39 1.60 1.68 1.68 NTA per share (RM) 6.6 7.8 9.1 9.8 9.8 R
Slide 35: Disclaimer
Disclaimer This document has been prepared by AEON Credit Service (M) Berhad (“AEON Credit” or the “Group”) solely for the use at the presentation to analyst, fund managers and investors. The information contained in this document has not been independently verified. No representation or warranty, w
Slide 36: Thank You
THANK YOU Mr Lee Kit Seong Ms Lee Siew Tee Investor Relations Team Chief Corporate Officer Chief Financial Officer ir_info@aeoncredit.com.my leeks@aeoncredit.com.my stlee@aeoncredit.com.my Level 18, UOA Corporate Tower, www.aeoncredit.com.my Avenue 10, The Vertical, Bangsar South City, 03-2772 9000
AEON Credit Service (M) Berhad — Q2 FYE24 Earnings Presentation on 6ix